Question # 1

Should international transpiration costs decrease, the effect on international trade would include a.

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Increase in the volume of trade

smaller gain from trade

Decline in the income of home producers

Decrease in the level of specialization production.

Which exchange rate mechanism calls for frequent redefining of the par value by small amounts to remove payments disequilibrium.

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Dual exchange rates

Adjustable pegged exchange rates

Managed floating exchange rates

Crawling pegged exchange rates.

To be considered a good candidate for an export cartel a commodity should.

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Be a manufactured good

Be a primary product

Have a high price elasticity of supply

Have a low price elasticity of demand

A specification of a maximum amount of a foreign produced good that will be allowed to enter the country over a given time period is referred to as a

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Domestic subsidy

Export subsidy

Import quota

Export quota

Those who argue in favor of import protection generally give the impression that such restricted trade will.

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Decrease the level of national security

Provide benefits to some particular industry

Provide benefits to the entire nation

Not yield welfare losses for the nation

according to factor price equalization theorem, if country A is labor abundant then once trade opens.

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Wages and rents should fall in A

Wages and rents should rise in A

Wages should rise and rents should fall in A

Wages should fall and rents should rise in A

The gain from international trade are closely related to.

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the labor theory of value

How much the autarky price differs from international terms of trade change.

The fact that a country must lose from trade

All of the above

The supply of foreign currency tends to be

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Upward sloping

Down ward sloping

Vertical

Any of the above

According to the________ the export of the product that embodies large amounts of the relatively cheap, abundant resorce results in an increase in its price and income of the resource used intensively in the import competing product decrease as its demand falls.

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Ricardian equivalence theorem

Smithian equivalence theorem

Stolpher Samuelson theorem

Bemanke Greenspan theorem

When imports from a higher cost supplier with in customs union replace imports from a lower cost supplier outside the custom union, there exists.

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Trade creation

Trade diversion

Dynamic welfare effects

Comprehensive welfare efffects

The term of trade is given by theprices.

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Paid to all goods exported by the home country

Received for all goods exported by the home country

Received for exports and paid for imports.

Of primary products as opposed to manufactured products.

The "balance of trade" is a record of.

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Exports and imports of financial assets

The current account plus capital account

The net export of goods and services

The value of merchandise exports minus imports

The _____ analyzes the income distribution effects of trade in the short run when resources are immobile among industries.

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Stolpher Samuelson theory

Factor endowment theory.

Specific factor theory

Over lapping demand theory

A depreciation of the dollar willhave its most pronounced impact on imports if the demand for imports is.

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Constant

Inelastic

Elastic

Unitary elastic

The balance of trade can only worsen if income_______ relative to absorption

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Increases

Decreases

Does not change

None of the above

When one country provides most favored nation status for another if agrees to.

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Change that nation's product a lower tariff than any other nations

Charge that nation's products a tariff rate no higher than that on any other nation.

Charge that nation's products a higher tariff than any other nation's

Export to that nation any products that it wants to purchase

If export's are a constant proportion of GNP such that E = 18 GNP, find the level of imports that would represent a zero trade balance when GNP = 10,000

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180

555

1,800

5,555

If a small country imposes a tariff on an imported goods terms of trade will

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Improve

worsen

Not change

any of the above

The effect of the most favored nation clause is to.

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Eliminate all tariffs between countries

Increase all tariff rates between countries.

Maintain a nondiscriminatory structure of tariffs

Maintain a discriminatory structure of tariffs

Riskless transactions to take advantage of profit opportunities due to a price differential or a yield differtial in excess of transaction costs are called.

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Differential actions

Cash transactions

Arbitrage

Forward transactions

The trade model of the Swedish economists Hackscher and Ohlin maintains that.

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Absolute advantage determines the distribution of the gain from trade

Comparative advantage determines the distribution of the gains from trade.

The division of labor is limited by the size of the world market

A country exports goods for which its resource endowment are most suited.

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